Market Trends of Indonesia Telecom Industry
This section covers the major market trends shaping the Indonesia Telecom Market according to our research experts:
Increased Pace of 5G Roll Out
- According to the Ericsson Mobility Report, telecom companies stand to benefit most from providing business-to-business (B2B) 5G solutions to industries including manufacturing, energy, and utility businesses, as well as media and entertainment. As per the study, Indonesian telecom companies might see a 35% boost in income, or USD 8.2 billion, by 2030 if they provide 5G services to businesses, despite the country's difficulties implementing the fifth-generation technology.
- Bali became the sixth city to get 5G coverage after Surakarta, Jakarta, Surabaya, Makassar, and Balikpapan.
- Without the involvement and cooperation of several stakeholders of the country, such as the Ministries of Communication and Information, Tourism, and Creative Economy, the implementation of 5G would not have been feasible in Indonesia. Micro, small, and medium-sized enterprise (MSME) businesses may benefit from the potential and simplicity of accessing a more significant market by using the internet. Numerous fresh ideas can also be generated. To increase the chances for the country's digital economy to expand, the government is expected to utilize its access to the internet to foster the growth of the digital environment in the nation.
- Open signal reported that Telkomsel and Smartfren purchased 20 MHz and 10 MHz of the three 10 MHz TDD spectrum blocks in the 2.3 GHz band that Indonesia's Ministry of Communication and Information (KemKominfo) auctioned off in mid-April 2021. The availability of more spectrums should enable Indonesia's carriers to accommodate higher levels of mobile data consumption and enhance the mobile user experience in the future. Telkomsel started offering 5G service using the 2.3 GHz band spectrum, which is already accessible in eight cities. Indosat started offering 5G service in Surakarta utilizing the 1800 MHz band. After receiving their certificate of operation eligibility (SKLO) from regulator Kominfo, other companies are planning to deploy 5G. Smartfren has reportedly conducted 5G experiments utilizing the 26 GHz mmWave frequency.
- As per the Telecom review report, the government is developing several spectrum bands to serve the 5G network by farming and refarming frequency spectrum in all levels, such as low band, capacity band, and super high band. In March 2022, three national cellular providers (Telkomsel, Indosat, and XL Axiata) obtained government approval to launch commercial 5G services in Indonesia. These services are available in a limited number of residential areas and hotspots in 13 major cities. The Mandalika MotoGP 2022 and the G20 Summit are both expected to host the 5G Experience.
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Higher Demand for OTT Services
- Due to the country's massive population, extensive archipelago, and the current low cost of technological gadgets, Indonesia has one of the world's most saturated cellular telecommunications markets. Indonesia's population was estimated at 271 million in 2021, with 338.2 million mobile connections, or 126% of the total population. This results in the growth of over-the-top ("OTT") apps and the dominance of mobile operators in the internet service providers ("ISP") market.
- There was a growth in online video streaming after COVID-19. An estimated 66 million people use online streaming services in Indonesia, watching 3 billion hours of OTT video each month. These trends are expected to continue in the years to come. The OTT market has seen the demise of regional platforms like iflix and Hooq, the launch of Disney+, and the expansion of Chinese streaming goliaths iQIYI and WeTV into Asia. Viu, Netflix, and Vidio now hold most of the video streaming user base in Indonesia. These established players are now up against the newcomers looking to establish themselves.
- According to a Future of TV analysis by The Trade Desk, OTT streaming had a meteoric rise in popularity after the pandemic. Over one in three Indonesians already stream material over the top (OTT) as OTT has become a popular form of entertainment where people can watch their favorite shows across devices whenever and wherever they want. Indonesia is currently leading in the Southeast Asia region with a strong 40% year-over-year rise in OTT consumption.
- Smartphone costs have decreased, mobile broadband coverage has improved, and internet access has become more reasonably priced. The expansion of OTT in Indonesia may be linked to these trends. OTT platforms are adjusting their offers to attract these customers by considering consumer preferences. A low-cost version of Disney+ called Disney+ Hotstar teamed up with Telkomsel to give access to 160 million registered subscribers of the telecom company in 2021. More local and Asian content is available on the top three platforms than on any other platform in Indonesia's Play Store entertainment category. A weekly payment option is available in Vidio's subscription configuration for its sports broadcasting service.
